Under new legislation worldwide income taxation of foreign-controlled Offshore companies will no longer depend on where they are registered but on where they are managed and controlled.
Offshore Company in Cyprus
Companies registered in Cyprus
but managed and controlled from abroad, will only be taxed in Cyprus on their income generated in Cyprus. Offshore company in Cyprus will enjoy exemption from tax on foreign dividends and interest and income from any permanent establishment abroad, as well as all foreign tax credits and offsets of losses incurred abroad. They will not be entitled to benefits under the double taxation treaties, but will not be subject to the exchange of information rules under such treaties. So offshore company in Cyprus can be referred to as an international business company nowadays.
Cyprus New Tax Legislation – important for Cyprus company formation
The new legislation came related to company registration in Cyprus into force on 1 January 2003. Under the new law Cyprus tax is imposed:
- On the worldwide income of all residents of Cyprus, and
- No requirement for audited accounts therefore no need for an auditor;
- On the income generated in Cyprus by any non-residents of Cyprus.
- A company is considered resident if it has its management and control in Cyprus. Therefore any company that carries out operations outside Cyprus and belongs to non-residents of Cyprus and has its majority of the board of directors outside Cyprus is not liable to taxation in Cyprus. This means that non-resident – offshore companies in Cyprus cannot take the benefit of any double tax treaties involving Cyprus but at the same time will not be subject to the exchange of information rules under such treaties.
- On the other hand, if a Cyprus company wishes to take advantage of the double tax treaty network of Cyprus it is highly advisable to have the majority of the directors in Cyprus and to provide that all board meetings of the company shall take place in Cyprus (we can employ our Cyprus nominees for this purpose).
Summary
Worldwide income taxation of foreign-controlled or offshore companies will no longer depend on where they are registered but on where they are managed and controlled. Companies registered in Cyprus but managed and controlled from abroad, will only be taxed in Cyprus on their Cyprus-source income. They will enjoy exemption from tax of foreign dividends and interest and income from any permanent establishment abroad, as well as all foreign tax credits and offsets of losses incurred abroad. They will not be entitled to benefits under the double taxation treaties, but will not be subject to the exchange of information rules under such treaties. Contact CCLOGIC.COM today
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